By 2020, first-time buyers will need salary of £106K to buy home in London
The soaring cost of London house prices means that by 2020 first-time buyers will need to earn £106,000 a year before they can afford to buy a home in the capital. That’s the conclusion of research carried out by homeless charity Shelter. They found the average deposit needed in four years time will be a remarkable £138,000. At present, the average deposit needed is already out of many homebuyer’s reach at £80,000.
Shelter’s calculations are based on house prices in London rising 23% in the next four years which would bring the average property price to £558,000. House prices have already risen six times more than salaries in the last five years. In many areas of London annual salaries have actually fallen whilst house prices have reached record levels. In Lambeth, for example, annual wages fell by 1% since 2010 whereas house prices have risen 74%.
The picture outside London is a little better with an average wage of £64,000 forecast to be needed in 2020 and a typical deposit of £46,000 required for homes outside the capital costing, on average, £270,000. These figures show that across the country affordable housing is one of the biggest challenges facing the new government of Theresa May in the next four years. However, it’s in London that the widening gap between salaries and house prices is most apparent.
Campbell Robb, the chief executive of Shelter called on the new London mayor, Sadiq Khan, to make affordable housing one of his main goals saying: “It’s little wonder those in London on ordinary incomes are being denied having a home of their own when house prices are rising fifteen times higher than the average wage and the situation looks set to only get worse.
“Unless the Mayor of London commits to investing in homes that are actually affordable for people on ordinary incomes we will have a Generation Rent who are resigned to live in expensive, insecure private renting where they can never realise their dream of having a home to put down roots in.”